Delgado Advertising Agency was founded by Maria Delgado in January of 2013. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2014.
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DELGADO ADVERTISING AGENCY Trial Balance December 31, 2014 |
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Cash Accounts Receivable Supplies Prepaid Insurance Equipment |
Unadjusted |
Adjusted |
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$ 11,000 20,000 8,600 3,350 60,000 |
$ 11,000 21,500 4,800 2,500 60,000 |
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Accumulated Depreciation-Equipment |
$ 28,000 |
$ 34,000 |
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Accounts Payable |
5,000 |
5,000 |
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Interest Payable |
-0- |
150 |
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Notes Payable |
5,000 |
5,000 |
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Unearned Service Revenue |
7,200 |
5,900 |
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Salaries and Wages Payable |
-0- |
2,100 |
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Owner’s Capital |
25,500 |
25,500 |
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Owner’s Drawings |
12,000 |
12,000 |
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Service Revenue |
58,600 |
61,400 |
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Salaries and Wages Expense |
10,000 |
12,100 |
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Insurance Expense |
850 |
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Interest Expense |
350 |
500 |
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Depreciation Expense |
6,000 |
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Supplies Expense |
3,800 |
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Rent Expense |
4,000 |
4,000 |
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$129,300 |
$129,300 |
$139,050 |
$139,050 |
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Instructions
(a) Journalize the annual adjusting entries that were made.
(b) Prepare an income statement and an owner’s equity statement for the year ending December 31, 2014, and a balance sheet at December 31.
(c) Answer the following questions.
(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?
(2) If the company paid $12,500 in salaries in 2014, what was the balance in Salaries and Wages Payable on December 31, 2013?